Governor: Ill. Medicaid Plan Near "Collapse"

Pat Quinn says committees should tell him how to fix the state's health and public employee retirement programs.

By Christopher Wills, Associated Press|February 22, 2012 at 01:02 PM

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Illinois Gov. Pat Quinn (AP Photo/Seth Perlman)

SPRINGFIELD, Ill. (AP) — Illinois Gov. Pat Quinn warned Wednesday that the state’s Medicaid system is near collapse and government retirement funds are broken, but he offered no plan for fixing the problems.

In his annual budget address, Quinn said both issues must be studied by committees that will present their recommendations later this spring.

The Democratic governor also formally announced his plan to close 14 major state facilities, including two prisons. Dozens of other smaller offices around the state, such as state police laboratory, will also be closed or consolidated, he said.

“They impact every region in our state, but the need for lower spending in our budget gives us no choice,” Quinn said to a joint session of the Illinois House and Senate.

Lawmakers were virtually silent throughout Quinn’s speech, which lasted less than 30 minutes. They did not interrupt with applause even when he delivered a bit of good news, such as proposing a small increase in education funding or adding staff at homes for aging military veterans.

A governor’s budget proposal can be significantly changed by lawmakers, which happened last year when legislators felt Quinn wanted to spend too much.

Quinn said decades of poor decisions have left the state’s government pension systems in a mess. The pension funds for public school teachers and other state workers are about $83 billion short of the money they’ll eventually need to pay out. Each year, Illinois must pay more to help close that shortfall, eating up scarce state dollars.

“We must repair this broken system and we must do it now,” Quinn said.

But he did not spell out a plan. Instead, he said a “pension working group” will study the problem and come up with recommendations by April 17.

Similarly, he said Medicaid, which provides care for 2.7 million people in Illinois, “is on the brink of collapse.”

Quinn called for cutting Medicaid spending by $2.7 million next year, saying it could be done by cutting payments to doctors and hospitals, halting some services and restricting eligibility for the program. Quinn did not say what mix of those options he thinks would work best. He said another working group is studying the issue.

The idea of closing prisons and mental institutions is likely to be particularly unpopular with the General Assembly.

The facilities Quinn wants to close include the supermax prison in Tamms, a maximum security prison for women in Dwight and six halfway houses for inmates nearing release, aides said. Quinn will also call for closing two juvenile prisons, four mental institutions and various smaller facilities.

Illinois prisons are already overcrowded. In November, 48,620 people were squeezed into space designed for 33,700. The Corrections Department has begun counting areas like gymnasiums when calculating the space available for housing inmates.

Closing facilities would further complicate the situation. The two prisons and six “adult transition centers” on Quinn’s list house 2,648 inmates.

“The message was very clear, concise for the members of the Legislature. He topped it off by saying, ‘don’t expect to go home until we get our job done,’ which is a legitimate request for the governor to the Legislature,” Madigan said.

Republicans were less impressed.

“Governor Quinn’s matinee performance today was just rearranging the deck chairs on the Titanic,” said Pat Brady, chairman of the Illinois Republican Party.

All this comes after years of belt-tightening and a 67% increase in state income taxes. Despite those moves, the state’s expenses continue to overwhelm revenues. The administration expects revenues to climb $729 million in the upcoming fiscal year, but pension contributions alone are going up by $1 billion, soaking up all the new money available.

Quinn’s staff said discretionary spending in his budget — which doesn’t include pensions, Medicaid and other costs that are largely set by statute — would total $24.8 billion in the coming year, down 1.7% from this year. When all costs are included, general funds spending totals $33.8 billion, up 1.5%.

“The governor seems to be trying very hard to spin an impression that they’re actually cutting spending … when in fact the budget is going up,” said Sen. Matt Murphy, R-Palatine. “So the idea that somehow fiscal responsibility has come to the Quinn administration is patently false.”

One of the few areas where Quinn wants to increase spending is education. His budget proposes a $90 million increase, or about 1%, to help early childhood programs and college scholarships.

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